The Federal Government has floated the much awaited US$3
billion dual series bond to fund approved budgetary expenditures.
A statement from the Federal Ministry of Finance yesterday
quoted Minister Kemi Adeosun as saying that “the government would utilise
the proceeds of the Notes in funding the approved budgetary expenditures and
for refinancing of domestic debt, as may be applicable.”
According to Mrs. Adeosun, the Notes represent Nigeria’s
fourth Eurobond issuance, following issuances in 2011, 2013 (two series) and
earlier in 2017.
She noted: “Nigeria is implementing an ambitious economic
reform agenda designed to deliver long-term sustainable growth and reduce
reliance on oil and gas revenues while reducing waste and improving the
efficiency of government expenditure.
“Our economy is beginning to recover, Gross Domestic Product
(GDP) having returned to growth in 2017, but we must maintain the momentum
behind our investments in order to further drive growth. That is why we are,
and will continue to focus investment on the enabling infrastructure we need to
broaden economic productivity.
“Successfully extending out debt profile in the international
market to 30 years is a key element of that strategy as it establishes a basis
for the longer term financing required for transformational infrastructure
investment.
“As we have always stated we are progressively replacing debt
with revenue, which is reflected in the 2018 Budget proposal. We are
establishing the building blocks for inclusive growth and beginning to see the
results of the hard decisions that have been made to reset our economy
appropriately.”
The aggregate principal amount of the dual series bond
is being offered notes under the Federal Government’s US$4.5 billion
Global Medium Term Note programme (increased from US$1.5 billion).
The Notes comprise a US$1.5 billion 10-year series and a
US$1.5 billion 30-year series.
The Ministry of Finance said “the 10-year series will bear
interest at a rate of 6.5%, while the 30-year series will bear interest at a
rate of 7.625%, which will be repayable with a bullet repayment of the
principal on maturity.
The statement said “the offering, which attracted significant
interests from leading global institutional investors, is expected to be closed
on or about 28 November, 2017, subject to the satisfaction of various
customary closing conditions.”
When issued, the Notes will be admitted to the official list
of the UK Listing Authority and available to trade on the London Stock
Exchange’s regulated market.
Nigeria may apply for the Notes to be eligible for trading
and listed on the Nigerian FMDQ OTC Securities Exchange and the Nigerian Stock
Exchange.
The pricing was determined following a roadshow led by Mrs.
Adeosun; the Minister of Budget and National Planning, Senator Udoma Udo Udoma;
Central Bank of Nigeria (CBN) Governor Godwin Emefiele; Debt Management Office (DMO)
Director-General Ms. Patience Oniha, and the Director-General of the Budget
Office of the Federation, Mr. Ben Akabueze.
Commenting on the Notes’ pricing, the DMO Director-General
Patience Oniha said: “With the successful pricing of our 4th Eurobond, Nigeria
has become one of the few African issuers whose securities have attracted
strong investor interest amongst institutional investors across the globe.
“This time, Nigeria issued a new 10-year bond at a yield of
6.500% and a 30-year benchmark, priced at a yield of 7.625%, which despite the
longer tenure remains cheaper than our 15-year issuance earlier this year.
“The 30-year is a landmark as the tenor represents the first
by a sub-Saharan country other than South Africa and importantly establishes
the basis for long term infrastructure funding, which is a priority for this
government.”
Oniha expressed satisfaction with international investors’
recognition of Nigeria’s huge potential.
“Perhaps even more important is that with this dual tranche
issuance the objective of reducing the cost of government borrowing has been
achieved,” she added.
Source: The Nation
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